Crossing the Threshold

Are Americans finally cutting back on gasoline because of rising prices? The WSJ seems to think so. An excerpt:

Economists and policy makers have puzzled for years over what it would take to curb Americans' ravenous appetite for fossil fuels. Now they appear to be getting an answer: sustained pain.

People are starting to realize that these prices are here to stay for the long run which means that more cost efficient transportation will be used in the future. People will vacation less or vacation to places that aren't as far away. Also people will move closer to their jobs which could impact the way communities and cities are organized. These transitions are moving a little faster with the inflation numbers we are getting. Even core inflation advanced 2.5% from last year. What does this mean for commodity prices? This is a definite decrease in demand, but demand elsewhere is growing so the effect is ambiguous at best. Many experts predict $4/gallon gasoline in the summer, but I think drivers have had enough.